When to move to FL? (tax implications and more)

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dave_k
Posts: 342
Joined: Sat Dec 26, 2015 8:25 pm

When to move to FL? (tax implications and more)

Post by dave_k » Sat Nov 09, 2019 4:44 pm

My wife and I have a vacation rental house that we visit to maintain twice a year, but is rented most of the time, and counts as a rental property (not a residence). We are planning to move into it sometime next year. It's in FL so there's no state income tax there, and we're moving from WI where we pay a few tens of thousands per year in state taxes. We'd be keeping the same jobs and roughly the same income and benefits. It would seem optimal in terms of how the property is classified to move there right before the end of the year to stay under the personal use limit for the year, but establish residence there by the end of the year. However, it may be better to move and establish residence there sooner in the year so we only pay income taxes in WI for part of the year.

Am I correct about moving right before the end of the year being optimal in terms of how the property is classified?

Is it true that we'd only pay state income taxes on income earned in WI during the part of the year we reside here?

Would the brackets fill up as usual on the amount earned here, or is there some prorating where it's a fraction of what the total would be based on time in each state?

Would bonuses paid after moving to FL be entirely non-taxable in WI? And similarly for any other income or gains incurred? I have some control over timing.

Complications are as follows:

We need to sell our house in WI, and we don't know how quickly it will sell. We'd like to stay here through the summer at least, ideally in our current house, but have to balance that against selling while the market is best for it, which is likely spring or summer, and before any significant market correction (that we of course can't know in advance, but a longer wait increases the risk). If we sell too early in the year we may need to rent here for a while. And of course if it doesn't sell before we want to move, we'll have the added holding costs.

We need to decide on a date to block out the FL rentals far enough in advance that it doesn't start filling up past the point when we want to be there, which makes winging it more difficult. We can tell the agency to move people's reservations elsewhere after they are booked if we decide later, but they don't like that, and we want to keep using them to rent out the property for a few months a year while we travel or spend summers in the northeast in the future.

Of course being able to choose when to move to a low tax state while keeping our jobs is a nice problem to have, and we'll be OK however we do it, but I want to make sure we're not handling this in a sub-optimal way, or overlooking important considerations, so any advice is appreciated. I also plan to ask our accountant these questions.

Gill
Posts: 5774
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: When to move to FL? (tax implications and more)

Post by Gill » Sat Nov 09, 2019 5:23 pm

Without attempting to answer all your questions, on the surface it seems you have a problem identifying the exact date you become a Florida resident. Wisconsin will also have something to say about that. In other words, simply moving into your rental property doesn't necessarily establish Florida residence in the eyes of Wisconsin. You must not only establish Florida residence but give up your Wisconsin residence.

There are many publication in Florida about the steps that must be taken to accomplish an effective transfer of residence. From a brief review of your facts, it appears you are hoping to retain substantial ties to Wisconsin while attempting to establish a Florida residence. Without taking the proper steps you might very well have Wisconsin taking the position you never gave up your residence there and there you are subject to taxes there. At the very least you should record a Florida Affidavit of Domicile and notify Wisconsin that you have given up your residence there.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

Beehave
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Re: When to move to FL? (tax implications and more)

Post by Beehave » Sat Nov 09, 2019 5:58 pm

Your voter registration and auto registrations from the state you are leaving should be cancelled. Return the plates. Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state. Some time after the move you will be eligible to apply for a homestead status for you Florida home which gives you a tax break and limits future tax increases.

This information is a few years old but I believe it is still in effect. Also, there may be other things you'll need to do, but these I believe are key factors.

Katietsu
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Re: When to move to FL? (tax implications and more)

Post by Katietsu » Sat Nov 09, 2019 6:12 pm

Please confirm, but I believe Wisconsin uses a percentage approach to determining income tax for part year residents. You calculate your tax liability on your full year income then multiply that amount by the % of income that is taxable to Wisconsin. For instance, say that your income was $100,000 which would result in a income tax liability of $5000 to WI. But you received $40,000 while living In WITH and $60,000 after establishing residency in FL. You would owe WI $5000 x $40000/$100000 = $2000.

So keep good records to document the income and deductions that belong to each period of state residency.

PaulF
Posts: 193
Joined: Wed Aug 06, 2008 10:07 pm
Location: Wisconsin

Re: When to move to FL? (tax implications and more)

Post by PaulF » Sat Nov 09, 2019 6:17 pm

Pretty sure these could shed light on your questions:

https://www.revenue.wi.gov/DOR%20Publications/pb122.pdf (Tax information of non- and part-year residents)

https://www.revenue.wi.gov/Pages/Form/2 ... idual.aspx (general forms for individuals)

https://www.revenue.wi.gov/TaxForms2017 ... R-inst.pdf (Instructions for form 1NPR)

Here is an excerpt from that last form:
If you changed your legal residence from Wisconsin during 2017 or 2018 and you did not previously complete a questionnaire for that change, answer the following questions.
1. a. On what date did you move from Wisconsin?
b. When you moved from Wisconsin, did you intend to move back to Wisconsin? If yes, when?
c. If you moved back to Wisconsin, indicate date and explain the circumstances under which you moved back to Wisconsin.
2. Did you establish a legal residence in another state? If yes, in which state and on what date?
3. After establishing legal residency in the new state, list the dates you were in Wisconsin.
4. When were you physically present in your new state of legal residence (please list dates)?
5. Did your spouse and dependent children (if any) move to your new state of legal residence? If yes, when?
6. a. On what date did you begin working in your new state of legal residence?
b. Was your job permanent, temporary, or seasonal? 7. In your new state of legal residence, referred to in question 2, did you:
Check one and explain
If no, why not? If no, why not? If no, why not? If no, why not?
a. Register to vote?
b. Purchase a home?
c. Obtain a driver’s license?
d. Register an auto or other vehicle? e. File resident income tax returns?
If yes, when?
If yes, when?
If yes, when?
If yes, when?
If yes, what years filed?
If no, why not?
8. Since changing your legal residence from Wisconsin, have you: a. Performed services for income in Wisconsin?
b. Purchased/renewed Wisconsin auto license plates?
c. Renewed a Wisconsin driver’s license?
If yes, when? If yes, when? If yes, when? If yes, when? If yes, when?
If yes, when? Type of license? County purchased in?
g. Listed Wisconsin as your state of legal residence for purposes of your auto insurance?
h. Listed Wisconsin as your state of legal residence for purposes of your will?
i. Listed Wisconsin as your state of legal residence for purposes of any legal proceedings?
j. Obtained or renewed any Wisconsin trade or professional licenses or union memberships?
d. Voted in Wisconsin, in person or by absentee ballot?
e. Attended or sent your children to Wisconsin schools?
f. Purchased a Wisconsin resident hunting, fishing, or trapping license?
If yes, when? 9. If you answered “yes” to any of the questions 8a through 8j, please explain why you have taken such action.
10. Did you or your spouse own the real estate you occupied as your home while living in Wisconsin? If yes, have you disposed of it? If yes, when? If you still own the Wisconsin home, what use do you make of it and how often?
11. If you established a legal residence in a new state but are using a Wisconsin address on your 2018 tax returns, please explain.

I-151 Legal Residence Questionnaire Wisconsin Department of Revenue

trueblueky
Posts: 1625
Joined: Tue May 27, 2014 3:50 pm

Re: When to move to FL? (tax implications and more)

Post by trueblueky » Sat Nov 09, 2019 6:20 pm

Another tax consideration is Florida homestead exemption on real estate. Check with the county assessor in Florida.

https://m.wikihow.com/Apply-for-a-Homes ... in-Florida

The Homestead exemption can reduce your assessed value by $50,000. The first $25,000 is exempt from all property taxes; the third $25,000 (from $50,001 to $75,000) is exempt from all but school property tax. Just as important, assessments of homes covered by homestead can not go up more than 3% in a year. You should end up paying much less property tax as a resident owner than as landlord for a rental.

jebmke
Posts: 9856
Joined: Thu Apr 05, 2007 2:44 pm

Re: When to move to FL? (tax implications and more)

Post by jebmke » Sat Nov 09, 2019 6:35 pm

PaulF wrote:
Sat Nov 09, 2019 6:17 pm
Pretty sure these could shed light on your questions:

https://www.revenue.wi.gov/DOR%20Publications/pb122.pdf (Tax information of non- and part-year residents)

https://www.revenue.wi.gov/Pages/Form/2 ... idual.aspx (general forms for individuals)

https://www.revenue.wi.gov/TaxForms2017 ... R-inst.pdf (Instructions for form 1NPR)

Here is an excerpt from that last form:
If you changed your legal residence from Wisconsin during 2017 or 2018 and you did not previously complete a questionnaire for that change, answer the following questions.
1. a. On what date did you move from Wisconsin?
b. When you moved from Wisconsin, did you intend to move back to Wisconsin? If yes, when?
c. If you moved back to Wisconsin, indicate date and explain the circumstances under which you moved back to Wisconsin.
2. Did you establish a legal residence in another state? If yes, in which state and on what date?
3. After establishing legal residency in the new state, list the dates you were in Wisconsin.
4. When were you physically present in your new state of legal residence (please list dates)?
5. Did your spouse and dependent children (if any) move to your new state of legal residence? If yes, when?
6. a. On what date did you begin working in your new state of legal residence?
b. Was your job permanent, temporary, or seasonal? 7. In your new state of legal residence, referred to in question 2, did you:
Check one and explain
If no, why not? If no, why not? If no, why not? If no, why not?
a. Register to vote?
b. Purchase a home?
c. Obtain a driver’s license?
d. Register an auto or other vehicle? e. File resident income tax returns?
If yes, when?
If yes, when?
If yes, when?
If yes, when?
If yes, what years filed?
If no, why not?
8. Since changing your legal residence from Wisconsin, have you: a. Performed services for income in Wisconsin?
b. Purchased/renewed Wisconsin auto license plates?
c. Renewed a Wisconsin driver’s license?
If yes, when? If yes, when? If yes, when? If yes, when? If yes, when?
If yes, when? Type of license? County purchased in?
g. Listed Wisconsin as your state of legal residence for purposes of your auto insurance?
h. Listed Wisconsin as your state of legal residence for purposes of your will?
i. Listed Wisconsin as your state of legal residence for purposes of any legal proceedings?
j. Obtained or renewed any Wisconsin trade or professional licenses or union memberships?
d. Voted in Wisconsin, in person or by absentee ballot?
e. Attended or sent your children to Wisconsin schools?
f. Purchased a Wisconsin resident hunting, fishing, or trapping license?
If yes, when? 9. If you answered “yes” to any of the questions 8a through 8j, please explain why you have taken such action.
10. Did you or your spouse own the real estate you occupied as your home while living in Wisconsin? If yes, have you disposed of it? If yes, when? If you still own the Wisconsin home, what use do you make of it and how often?
11. If you established a legal residence in a new state but are using a Wisconsin address on your 2018 tax returns, please explain.

I-151 Legal Residence Questionnaire Wisconsin Department of Revenue
I filed a very similar form when I moved from Milwaukee to Belgium in the middle of 2003. It was filed with my part-year Resident tax return. In my case, the WI return was filed through the last day my spouse was still in WI (question 5) even though I had established my residence in Belgium earlier in the year (Question 2). D&T prepared the return this way.
When you discover that you are riding a dead horse, the best strategy is to dismount.

smitcat
Posts: 4362
Joined: Mon Nov 07, 2016 10:51 am

Re: When to move to FL? (tax implications and more)

Post by smitcat » Sat Nov 09, 2019 7:34 pm

Beehave wrote:
Sat Nov 09, 2019 5:58 pm
Your voter registration and auto registrations from the state you are leaving should be cancelled. Return the plates. Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state. Some time after the move you will be eligible to apply for a homestead status for you Florida home which gives you a tax break and limits future tax increases.

This information is a few years old but I believe it is still in effect. Also, there may be other things you'll need to do, but these I believe are key factors.
"Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state"

Please provide a source that describes these substantial one time fees.
https://www.flhsmv.gov/fees/

Gill
Posts: 5774
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: When to move to FL? (tax implications and more)

Post by Gill » Sat Nov 09, 2019 7:41 pm

smitcat wrote:
Sat Nov 09, 2019 7:34 pm
Beehave wrote:
Sat Nov 09, 2019 5:58 pm
Your voter registration and auto registrations from the state you are leaving should be cancelled. Return the plates. Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state. Some time after the move you will be eligible to apply for a homestead status for you Florida home which gives you a tax break and limits future tax increases.

This information is a few years old but I believe it is still in effect. Also, there may be other things you'll need to do, but these I believe are key factors.
"Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state"

Please provide a source that describes these substantial one time fees.
https://www.flhsmv.gov/fees/
The fee is not that big a deal - $225.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

PaulF
Posts: 193
Joined: Wed Aug 06, 2008 10:07 pm
Location: Wisconsin

Re: When to move to FL? (tax implications and more)

Post by PaulF » Sat Nov 09, 2019 9:24 pm

jebmke wrote:
Sat Nov 09, 2019 6:35 pm
I filed a very similar form when I moved from Milwaukee to Belgium in the middle of 2003.

I am confused. Belgium is still in Wisconsin, just ~35 miles north of Milwaukee! :mrgreen:

smitcat
Posts: 4362
Joined: Mon Nov 07, 2016 10:51 am

Re: When to move to FL? (tax implications and more)

Post by smitcat » Sun Nov 10, 2019 5:54 am

Gill wrote:
Sat Nov 09, 2019 7:41 pm
smitcat wrote:
Sat Nov 09, 2019 7:34 pm
Beehave wrote:
Sat Nov 09, 2019 5:58 pm
Your voter registration and auto registrations from the state you are leaving should be cancelled. Return the plates. Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state. Some time after the move you will be eligible to apply for a homestead status for you Florida home which gives you a tax break and limits future tax increases.

This information is a few years old but I believe it is still in effect. Also, there may be other things you'll need to do, but these I believe are key factors.
"Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state"

Please provide a source that describes these substantial one time fees.
https://www.flhsmv.gov/fees/
The fee is not that big a deal - $225.
Gill
Thank you Gill - That is what I had thought.

Beehave
Posts: 583
Joined: Mon Jun 19, 2017 12:46 pm

Re: When to move to FL? (tax implications and more)

Post by Beehave » Sun Nov 10, 2019 10:27 am

smitcat wrote:
Sat Nov 09, 2019 7:34 pm
Beehave wrote:
Sat Nov 09, 2019 5:58 pm
Your voter registration and auto registrations from the state you are leaving should be cancelled. Return the plates. Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state. Some time after the move you will be eligible to apply for a homestead status for you Florida home which gives you a tax break and limits future tax increases.

This information is a few years old but I believe it is still in effect. Also, there may be other things you'll need to do, but these I believe are key factors.
"Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state"

Please provide a source that describes these substantial one time fees.
https://www.flhsmv.gov/fees/
It's difficult to find specifics. Here's a site from Sarasota County:

https://www.sarasotataxcollector.com/se ... to-florida

If your vehicle is less than 6 months old and purchased out-of-state, Florida will want to know the sales tax paid and I believe will charge you the delta if it was less than the county's tax you're registering in.

For older cars, below is the best current info I could find with a google search:

"Your Florida title transfer fees are $77.25 for an out-of-state title transfer fee for an electronic title, $2 to record a lien, and $225 for a new-to-Florida vehicle fee, as of 2019. For a paper title, the charge is $2.50 more."

My recollection from several years ago was that registering and titling two out of state cars (8 and 9 years old), getting plates, and obtaining two drivers' licenses cost about $950. You will also need to provide proof of insurance to get title and registration. Depending on county and zip code, auto insurance can be surprisingly high in Florida - - people from places like Chicago and metro-NY-NJ complain that rates are significantly higher in the Tampa area than what they were paying up north (and what friends, relatives up there currently pay). If moving to Florida and insurance rates will be a consideration important to you, then be aware of the rating changes that occur over small distances relative to flood and auto insurance coverages. The rates can vary dramatically by being on one side of a county line or one side of a highway rather than the other.

Hope this is helpful to you.

smitcat
Posts: 4362
Joined: Mon Nov 07, 2016 10:51 am

Re: When to move to FL? (tax implications and more)

Post by smitcat » Sun Nov 10, 2019 10:46 am

Beehave wrote:
Sun Nov 10, 2019 10:27 am
smitcat wrote:
Sat Nov 09, 2019 7:34 pm
Beehave wrote:
Sat Nov 09, 2019 5:58 pm
Your voter registration and auto registrations from the state you are leaving should be cancelled. Return the plates. Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state. Some time after the move you will be eligible to apply for a homestead status for you Florida home which gives you a tax break and limits future tax increases.

This information is a few years old but I believe it is still in effect. Also, there may be other things you'll need to do, but these I believe are key factors.
"Be aware that registering in Florida will require paying a substantial one-time fee in addition to the regular fee for cars previously purchased out-of-state"

Please provide a source that describes these substantial one time fees.
https://www.flhsmv.gov/fees/
It's difficult to find specifics. Here's a site from Sarasota County:

https://www.sarasotataxcollector.com/se ... to-florida

If your vehicle is less than 6 months old and purchased out-of-state, Florida will want to know the sales tax paid and I believe will charge you the delta if it was less than the county's tax you're registering in.

For older cars, below is the best current info I could find with a google search:

"Your Florida title transfer fees are $77.25 for an out-of-state title transfer fee for an electronic title, $2 to record a lien, and $225 for a new-to-Florida vehicle fee, as of 2019. For a paper title, the charge is $2.50 more."

My recollection from several years ago was that registering and titling two out of state cars (8 and 9 years old), getting plates, and obtaining two drivers' licenses cost about $950. You will also need to provide proof of insurance to get title and registration. Depending on county and zip code, auto insurance can be surprisingly high in Florida - - people from places like Chicago and metro-NY-NJ complain that rates are significantly higher in the Tampa area than what they were paying up north (and what friends, relatives up there currently pay). If moving to Florida and insurance rates will be a consideration important to you, then be aware of the rating changes that occur over small distances relative to flood and auto insurance coverages. The rates can vary dramatically by being on one side of a county line or one side of a highway rather than the other.

Hope this is helpful to you.
Thank you...
"Your Florida title transfer fees are $77.25 for an out-of-state title transfer fee for an electronic title, $2 to record a lien, and $225 for a new-to-Florida vehicle fee, as of 2019. For a paper title, the charge is $2.50 more."
Yes - this is what I was told , not really significant number.

"Depending on county and zip code, auto insurance can be surprisingly high in Florida - - people from places like Chicago and metro-NY-NJ complain that rates are significantly higher in the Tampa area than what they were paying up north"
We have been hard quoted either similar or lower insurance rates to our current area (NY) except for boat insurance.

"If your vehicle is less than 6 months old and purchased out-of-state, Florida will want to know the sales tax paid and I believe will charge you the delta if it was less than the county's tax you're registering in."
Thank you here as well - we will not have new cars or boats to register in Florida , but if /when we do the rates to do so are lower in Florida than where we are now.

Topic Author
dave_k
Posts: 342
Joined: Sat Dec 26, 2015 8:25 pm

Re: When to move to FL? (tax implications and more)

Post by dave_k » Sun Nov 10, 2019 4:53 pm

Thanks everyone for your helpful replies!

My wife and I will move at the same time, and get driver's licenses, register our cars, and register to vote right away, as well as changing our address with everyone we can think of, and forwarding our mail. We have no plans to move back to WI, and if we still own the house here, it will be for sale and unoccupied. We will notify WI as necessary. The effective date will be noted as will the timing of all income, and we'll try to push income like bonuses to after the move date.

California also had a high fee for bringing cars in from out of state when I moved there (I think $300 25 years ago). Annoying, but not critical, and it won't affect the timing decision.

We may file for homesteading in 2021 (full year required) which would lower the property taxes a bit. My understanding is that it ratchets down when tax assessments go down and then can't rise from the start or low point more than 3% a year, which means it's ok to start when we move even if we think it's likely to be near the top of the real estate market. We'll double check though. The 3% increase cap could eventually help much more than the $50k exemption. However, renting for over 30 days/year disqualifies it, and we may want to do that some years, so we'll have to balance the potential rent against the taxes. So stupid that they don't just prorate it. If the assessment drops a bunch and starts climbing back up much more than 3% per year, we may just rent it the peak 4 weeks of the year (around spring break) and take a vacation elsewhere, and let is sit empty during the summer if we're in the northeast. Those 4 weeks could cover most of the property taxes, as high as they are (or the vacation we take, depends how you look at it), but it would be so dumb to have to let it sit empty all summer even though it's low season. That really reduces the value of the homesteading to someone in our situation, but I suppose we're not really who it's aimed at. I'm not a fan of homesteading laws in general because they shift the tax burden to people who can't vote there and don't have a say in it. Seems like a form of taxation without representation.

I'm still curious about whether moving right before the end of the year is optimal for classifying the property (not for homesteading, but for federal rental/residence tax purposes), so I can calculate if saving on income taxes by moving earlier would override it, and by how much. I may only be able to get an accurate picture of this from my accountant.

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